Spotify Welcomes European Union Antitrust Charge Against Apple
The European Commission has issued antitrust charges against Apple over the company’s App Store practices. The Commission says it found Apple in violation of its competition rules with its App Store policies after a Spotify complaint in 2019.
Apple faces a fine of up to 10 percent of its annual revenue if found guilty. This could be up to $27 billion given that Apple’s revenue for 2020 was $274.5 billion. Worst still, the company could also be forced to change its business model as regards the app store. This could have a more damaging effect as it would mean a potential loss in revenue.
Spotify has responded to the initial charges. “Ensuring the iOS platform operates fairly is an urgent task with far-reaching implications. The European Commission’s statement of objections is a critical step toward holding Apple accountable for its anticompetitive behavior, ensuring meaningful choice for all consumers and a level playing field for app developers,” Horacio Gutierrez, Spotify’s chief legal officer says.
In an emailed statement, Apple issued its response; “Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that. Spotify does not pay Apple any commission on over 99% of their subscribers and only pays a 15% commission on those remaining subscribers that they acquired through the App Store. At the core of this case is Spotify’s demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows. Once again, they want all the benefits of the App Store but don’t think they should have to pay anything for that. The Commission’s argument on Spotify’s behalf is the opposite of fair competition”.
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Apple argues that its 30 percent cut, called Apple tax, is essential to the operation of the store. It says that the revenue contributes toward the costs of maintaining the App Store and enforcing its content, privacy, and security policies.
Spotify had claimed that Apple uses its App Store to stifle innovation and limit users to its own Music service. Rakuten also made a similar complaint alleging that it’s anti-competitive for Apple to take a 30 percent commission on ebooks sold through the App Store while promoting its own Apple Books service.
More recently, Epic games have opposed Apple’s store policies, filing an antitrust suit earlier in the year. Apple has also made some adjustments. It’s now allowing some video streaming apps to bypass the App Store cut. Also, it reduced its App Store commission rate to 15 percent for developers with under $1 million in annual revenue.
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